Georgia has a 20% flat personal income tax (decreasing to 15% by 2012).
Employment income, including benefits, is taxed at a flat 20%. The income of individual entrepreneurs is taxed at 20% and income related to immovable property at 12%. Dividends and interest are subject to a 5% tax rate.
Basis - Resident individuals are taxable on income received from domestic sources.
Nonresidents are taxable only on Georgiansource income. Dividends and interest received by resident individuals from resident companies, which were previously taxed at source, are excluded from the taxable base.
Residence - An individual is a resident if he/she actually stays in Georgia for more
than 182 days in any continuous 12-month period ending in a tax year.
Tax Filing status - Each registered individual taxpayer must file a separate return. Families, however, may file joint property tax returns.
Taxable income - The main categories of taxable income include employment income, dividends and interest, royalties, pensions, rental income, income from the disposal of property and income from independent activities, including business income (i.e. individual entrepreneurs).
Capital gains - Capital gains derived from a business activity are included in business income. Income from the alienation of private property not related to a business activity is not taxable if the property has been held for more than 2 years. Capital gains are included in gross income and after application of relevant deductions are taxed at a rate of 12%.
Tax Deductions and tax allowances - Expenses related to business activities are deductible for individual entrepreneurs. There are no personal deductions or allowances.
Georgia Corporate income tax rate is 15%.
Residence - An entity generally is considered a resident of Georgia if it is registered in Georgia.
Basis - Residents are taxable on their worldwide income, i.e. on income received from both domestic and foreign sources.
Taxable income - Georgian entities are taxed on profits, which are the difference between income derived from economic activities and expenses that may be deducted under the tax code.
Taxation of dividends - Dividends received from another Georgian company or a foreign company are excluded from the taxable base.
Capital gains - Capital gains are taxable as business income at the regular corporate income tax rate.
Losses - Losses may be carried forward for up to 10 years beginning 1 January 2010. Loss carryback is not permitted.
Tax Rate - Georgia corporate tax rate is 15%
Surtax - No
Alternative minimum tax - No
Foreign tax credit - Profit taxes paid on income earned outside Georgia may be credited against Georgian tax, but the amount of credited taxes should not exceed the amount of tax assessed in Georgia for that income or profit in accordance with the applicable rates.
Participation exemption - No
Holding company regime - No
Tax Incentives - Accelerated depreciation may be taken on certain groups of assets (not more than twice the normal depreciation rate envisaged in the tax code). Taxpayers are entitled to fully deduct the costs of purchased, produced or leased fixed assets in the year the assets are put into operation (a form of capital allowance). If the taxpayer utilises the right of full deduction, this method may not be changed for 5 years with respect to all fixed assets acquired from that time.
Dividends - Dividends paid to nonresident entities and to individuals (both resident and nonresident) are subject to a 5% withholding tax unless the rate is reduced by treaty.
Interest - The withholding tax on interest is 5% whether paid to residents or nonresidents but may be reduced by treaty.
Royalties - The withholding tax on all types of royalty payments is 10% unless the rate is reduced by treaty.
Branch remittance tax - No
Other taxes on corporations:
Capital duty - No
Payroll tax - No
Real property tax - The rate of property tax is established by the local authorities and may not exceed 1% of the average residual value of the assets on an annual basis. Specific rates apply to land, depending on the location and fertility of the land.
Social security - Social security tax was abolished as from 1 January 2008.
Stamp duty - No
Transfer tax - No
Other - Any activity that requires a license for the use of natural resources (except for land) owned by the state is subject to a fee for the use of natural resources.
Transfer pricing - A specific provision in the tax code, which addresses the taxation of both domestic and cross-border transactions between related persons, may be interpreted as a transfer pricing rule. The tax authorities may allocate income and expenses between related parties based on principles that would have applied in transactions between independent persons.
Thin capitalisation - Georgia does not have a thin capitalisation regime, but there is a limit on the deduction of interest that exceeds 30% on an annual basis.
Controlled foreign companies - No
Other - No
Disclosure requirements - No
Administration and compliance:
Tax year - Calendar year
Consolidated tax returns - No
Tax Filing requirements - Georgia operates a self-assessment regime. Annual income tax returns must be filed no later than 1 April of the year following the tax year. The deadline may be extended for up to 3 months, but the expected corporate income tax payment deadline is 1 April of the year following the tax year. Advance payments are payable in 4 instalments.
Penalties - Financial penalties include penalties for failing to register with the tax authorities, nonfiling and delayed filing of tax returns, violation of the accounting rules, delayed payment of tax, under-declaration of tax liability, failure to withhold tax, etc.
The standard rate of VAT in Georgia is 18%; certain transactions are exempt or zero-rated.
Taxable transactions - VAT is levied on the sale of goods and the provision of services.
Registration - A business with annual business revenue of GEL 100,000 must register for VAT purposes.
Filing and VAT payment - Filing and payment of VAT must be made by the 15th of the month following the reporting month. Input VAT may be credited against output VAT.
Income Tax Rate
Corporate Tax Rate
Sales Tax / VAT Rate
Last Update: Nov 2010
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